needs, reflecting continued pressure to improve profitability while maintaining product quality. Meanwhile, retailer write-in comments consistently emphasized themes including localized merchandising, stronger pre- pared-food offerings, improved execution and tailoring assortments to neighborhood demographics. Many respondents also pointed toward Hispanic merchandising, regional sourcing and differentiated fresh experiences as opportunities to stand apart from national competitors. Those comments reinforce Parker’s argument that differentiation—not simply price—will determine future success in produce. Instead of viewing fresh departments pri - marily through a supply-chain lens, she said retailers should think more like marketers. That means understanding how consum- ers discover products, how they plan meals and what motivates them to purchase fresh foods before they ever walk into a store. Organic lift The survey also highlighted a shift in where retailers plan to invest their resources over the next year. While meat continues to anchor the perimeter for many operators, respondents indicated prepared foods, deli and value-added fresh offerings are expected to receive the largest share of new investment as grocers seek to capture a larger share of meal occasions. That strategy reflects changing consumer behavior, Parker said. Consumers today are looking less for individual ingredients and more for com- plete meal solutions, particularly younger shoppers who often decide what they want to eat before they ever walk into a supermarket. One area illustrating that shift is organic produce. Organic fruits and vegetables now account for a record 8.5% of produce pounds sold, according to Circana’s year-to-date data, a trend Parker attributes largely to younger households and families with chil- dren. Rather than simply trading between conventional and organic versions of the same product, younger shoppers increas- ingly compare fresh produce with entirely
different healthy snack alternatives. “We in the industry think about organ- ics as the price gap,” Parker said. “But the behavior I’m seeing with young families and young people today is, ‘I like this organic piece, and if this doesn’t resonate with me, I’ll go buy an organic power bar.’ The switching behavior isn’t between organic and conventional. It’s between fresh mini peppers and something else that’s healthy and easy to snack on.” That changing decision process requires retailers to rethink how fresh products are marketed, she said. “So many decisions happen, especially with people under the age of 40, before they ever get to a shelf,” Parker said. “We really have to stop saying we know millen- nials and Gen Z because I don’t think we really do.” Fresh departments under pressure The survey suggests retailers understand that simply expanding assortment is not enough. Labor remains the industry’s biggest operational challenge, according to respon- dents. Recruiting and retaining qualified associates continues to affect merchandis- ing, service levels and execution throughout fresh departments. Retailers also identified shrink reduction among their highest priorities, with many indicating they plan to invest in technology designed to improve forecasting, inventory management and waste reduction. Those priorities are consistent with
Parker’s view that supermarkets have done an exceptional job managing supply when it comes to produce but have spent compara- tively less time thinking about demand. She pointed to tomatoes as one example. Earlier this year, weather-related supply issues raised concerns throughout the industry. Yet despite those disruptions, tomato sales reached record levels in June because consumers still wanted tomatoes for specific recipes and occasions. “They still wanted their tomato experi- ence,” Parker said. “Supply will always be an important part of our equation in agri - business, but we have to also consider what consumers want, too. I think there’s a lot of dollars being left on the table.” She contrasted produce with beverages, where manufacturers have successfully created multiple occasions and product choices for virtually every shopper. “We talk so much about basket size shrinking, and yet beverages continue get- ting multiple items into the basket because they’ve differentiated water to different people in the same household,” Parker said. “Imagine if that was tomatoes or berries or cucumbers.” What retailers can do now Perhaps Parker’s strongest message cen- tered on what grocers can do immediately to strengthen fresh departments. Her recommendations extend well beyond merchandising displays or promo- tional pricing. First, retailers need to recognize that roughly 10% of produce sales now occur
Meat has been resilient despite higher prices with consumers increasingly viewing protein as an essential part of a healthy diet rather than a discretionary purchase.
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